- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 8, 1998
Cardinal Health, Inc.
(Exact Name of Registrant as Specified in Charter)
Ohio 0-12591 31-0958666
(State or Other (Commission File Number) (IRS Employer Identification
Jurisdiction of No.)
Incorporation)
5555 Glendon Drive
Dublin, Ohio 43016
(Address of Principal Executive Offices) (Zip Code)
(614) 717-5000
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
ITEM 5. OTHER EVENTS.
On October 9, 1998, Cardinal Health, Inc. ("Cardinal"), and Allegiance
Corporation ("Allegiance") announced that they have entered into an Agreement
and Plan of Merger, dated as of October 8, 1998 (the "Merger Agreement"),
pursuant to which Boxes Merger Corp., a newly formed wholly owned subsidiary of
Cardinal, will be merged with and into Allegiance (the "Merger"). Under the
terms of the Merger Agreement, stockholders of Allegiance will receive 0.4150
(the "Exchange Ratio") of a Cardinal Common Share for each share of Allegiance
Common Stock they hold. Upon the completion of Cardinal's previously announced
3-for-2 stock split (the record date for which is October 9, 1998, and the
payment date for which is October 30, 1998), the Exchange Ratio will be adjusted
so that stockholders of Allegiance will receive 0.6225 of a Cardinal Common
Share for each share of Allegiance Common Stock they hold. The Merger is
intended to be tax-free and to qualify as a pooling of interests for financial
reporting purposes. Consummation of the transaction is subject to the
satisfaction of certain conditions, including approvals by the stockholders of
Allegiance and the shareholders of Cardinal and receipt of certain regulatory
approvals, and is expected to be completed in the first half of calendar 1999.
Upon consummation of the Merger, Cardinal will assume all of Allegiance's
long-term debt, which totaled approximately $890 million as of October 9, 1998.
In connection with the execution of the Merger Agreement, Allegiance
and Cardinal entered into a Stock Option Agreement, dated October 8, 1998,
pursuant to which Allegiance granted Cardinal an option, exercisable under
certain circumstances specified in such agreement, to purchase up to 22,284,538
shares of Allegiance Common Stock (approximately 19.9% of the outstanding shares
of Allegiance Common Stock, without giving effect to the exercise of the
option), at a purchase price per share of the lower of $38.46 or the product of
the Exchange Ratio times the average of the closing prices (or, if such
securities should not trade on a given day, the average of the bid and ask
prices therefor on such day) of the Cardinal Common Shares as reported on the
NYSE Composite Tape during the five consecutive trading days ending on (and
including) the trading day immediately prior to the day the option is exercised.
In connection with the execution of the Merger Agreement, Mr. Lester
B. Knight, the Chairman and Chief Executive Officer of Allegiance, and Mr.
Joseph F. Damico, the President and Chief Operating Officer of Allegiance,
entered into Support/Voting Agreements, each dated October 8, 1998, with
Cardinal, pursuant to which Messrs. Knight and Damico agreed to take certain
actions in connection with the proposed Merger, including voting the shares of
Allegiance Common Stock beneficially owned by them in favor of the Merger at any
meeting of stockholders held to consider the Merger. Mr. Knight beneficially
owns approximately 1.5%, and Mr. Damico beneficially owns approximately 1.0%, of
the outstanding shares of Allegiance Common Stock.
In connection with the proposed Merger, Cardinal and Allegiance also
announced that they believe that the combination of Cardinal and Allegiance will
generate substantial revenue enhancement opportunities and cost savings, which
are believed to exceed $50 million within two years following completion of the
Merger, and that, based upon current information,
-2-
Allegiance's earnings growth rate will be in excess of 30% in calendar year 1998
and that the combined company is expected to achieve growth rates of 20% or more
following the Merger.
Except for historical information, all other information provided in
this Form 8-K consists of "forward-looking" statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to risks and uncertainties which could cause actual
results to differ materially from those projected, anticipated, or implied. The
most significant of such uncertainties are described in Cardinal's Form 8-K,
Form 10-K, and Form 10-Q Reports and exhibits to those Reports (including the
Exhibit 99.01 to this Form 8-K), and in Allegiance's forms and exhibits filed
with the Securities and Exchange Commission. These include (but are not limited
to) the costs and difficulties related to the integration of acquired
businesses, the loss of one or more key customer or supplier relationships, and
changes in the distribution outsourcing pattern for healthcare products and
services. Cardinal undertakes no obligation to update publicly any forward-
looking statement whether as a result of new information, future events or
otherwise.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(c) Exhibits.
99.01 Statement Regarding Forward-Looking Information (incorporated by
reference to Exhibit 99.01 of Cardinal's Form 10-K for the fiscal
year ended June 30, 1998 and filed with the Securities and
Exchange Commission on September 1, 1998).
-3-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CARDINAL HEALTH, INC.
Dated: October 13, 1998 By: /s/ George H. Bennett, Jr.
------------------------------
George H. Bennett, Jr.
Executive Vice President,
General Counsel and Secretary
-4-